Remember the minimum wage? You know, one of the centerpieces of President Obama’s economic program? And a cause celebre among progressives in the United States? Apparently most of the Mainstream Media didn’t – as made clear by most of its reports on this morning’s official employment data. They crowed about the strong monthly wage gains recorded for U.S. workers in January, but never mentioned all the minimum wage hikes that went into effect last month.
These wages rose in no less than 21 states, both because voters or legislatures approved new increases, and because previously scheduled increases went into effect. And some of those states were among America’s biggest (notably, Florida, New Jersey, New York, and Ohio) while others were respectably in the middle (like Colorado, Maryland, Massachusetts, Minnesota, Missouri, and Washington).
I’m not enamored with raising the minimum wage as a poverty-fighting measure – let alone a reform that will help the middle class. (At the same time, some labor union contacts of mine have sent me via emails that I don’t yet have permissioon to make public impressive evidence that the effects of such increases have rippled up the income ladder.)
But my views of the minimum wage increase aren’t the point here. The point instead is that such increases are products of government fiat. They have absolutely nothing to do with the fundamental health of the labor market, including the issue of whether this market is getting tight enough to start boosting workers’ paychecks to a respectable degree.
You’d think that reality was pretty obvious, especially given all the attention minimum wage issues have received. But the hikes were completely ignored in the coverage of The New York Times, The Washington Post, the Financial Times, The Wall Street Journal, Reuters, and The Economist. They were referred to by Bloomberg and by Marketwatch.com.
Actually, Bloomberg provided some interesting reasons for thinking that the minimum wage hikes had relatively little to do with the January wage increases. But the evidence was hardly dispositive. Further, the article’s reference to “one-time boosts in pay rates” overlooks the fact that in several states (including Maryland, Minnesota, and New York at the very end of the year) the minimum wage will go up later in 2015. Several states, moreover (including California, Maryland, Massachusetts), will raise their minimum wages in 2016 and beyond, and numerous others have regularly indexed the wage to inflation or some other measure.
All of which means that minimum wage laws are likeliest to have a growing impact on the U.S. labor market going forward. So whenever you hear some politician or economist or pundit pronouncing on how well the employment picture has improved since the recession’s official end (in mid-2009), make sure to check whether they’ve included these artificial wage increases in their calculations. For if they haven’t, let the reader beware.